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Brian Mudd

How the ACA rulings impact Floridians & the back story on the rulings, What you need to know about the housing market, Q&A stocks in retirement & more:

 
Posted July 23rd, 2014 @ 8:30am

Cheat Sheet Q&A:  Is it ever a good idea to invest in stocks in retirement?

Hi Brian, You've referenced retirement plans that feature income derived though dividends.  Most of what you hear from the financial industry suggests that you should be in other investments in retirement.  Can you explain in more detail what you've refereed to?

 

Bottom Line:  So the key to retirement regardless of how it’s derived is free cash flow (income).  From a big picture point of view I build retirement plans based on streams of income.  Simply put when your streams of income provide enough regular cash flow for you to retire according to your standard of living you’re ready to retire.  With regard to stocks my investment plan is as follows:  Investing in companies that are growing top-line (revenue) year over year, companies that have more cash than debt and companies that pay a dividend that yields more than what I can derive through fixed income.  Prior to retirement I set those dividends to automatically reinvest while I track the level of income available by those investments.  At the time of retirement I turn the reinvestment of dividends off and realize the benefit of that income stream without reduction of principal.  This is in conjunction with Social Security, pension payments, etc. 

 

I don’t think the average investor should necessarily try this on their own – I’d reach out to an advisor/planner you trust but for the skilled and experienced investor it’s a way to retain full benefit of your investment dollars rather than paying a premium for a like outcome (annuity or like product). 

 

If you have a topic or question you’d like me to address email me:  brianmudd@clearchannel.com

 

Audio Report:




Update - ACA decisions & potentially how many plan in Florida & US would be impacted:

 

Bottom Line:  A couple of weeks ago I covered the closing arguments being made by the plaintiffs in this case.  While it received virtually no attention, what was interesting to me was the argument being made was based on section 36 part B of the ACA.  Simply put the argument was that there was no Federal Mechanism for subsidies.  The subsidies were specifically designed to be administered through the states.  So I went to that section of the law and sure enough…  They were right.  So I suggested that this could be a game changer to the ACA.  Fast forward to the ruling yesterday. 

 

So we have two Federal Appeals Courts that had competing rulings.  One that stated that the subsidies administered through Healthcare.gov were illegal, one that said that while the law didn’t provide for them, it was intended and thus legal.  So now we wait for next steps to see where the final interpretation will come from and what the final verdict will be.  The most likely scenario is that this ends with the US Supreme Court will decide to either let whatever a ruling from a full panel of the DC court will rule or they will hear the case and rule themselves.  In the meantime who is potential affected and what would the outcome be if the subsidies through healthcare.gov are deemed to be illegal?:

 

Nationally:

 

  • 86% of all exchange based policies would be impacted

 

In Florida: 

  • 91% of Floridians who signed up for polices (983,000 people) would lose their subsides

 

The cost consideration:

 

  • The average cost increase for exchange based policies would average 76%


For additional texture…  It’s important to remember how this law was written to be executed.  The reason the states were to be the administrators of any subsidies was for the purpose of vetting the income for qualification via the mechanism that’s already in place for Medicaid.  Those who wrote and passed the law expected the states to all have exchanges.  The problem they ran into is that it was an unfunded mandate from the Federal Government.  Therefore they couldn’t force states to create their own exchanges and its why even many Democrat run states opted to not create exchanges.  The end result is that Healthcare.gov became the virtual monopoly for exchange based policies.  Without the state mechanism to vet the eligibility for subsidies we’ve had an enormous mess.  An internal review by the Department of Health and Human Services suggested that 50% or more of those who signed up for policies with subsidies may have underreported income to get the subsidies.  So here we are with another enormous legal issue pertaining to ACA based on at a minimum it’s extremely poor construction and execution. 

 

Audio Report:

 

 


Decent news / Cautious news with latest existing home sales info:

 

Bottom Line:  Here’s what you really need to know about existing home sales based on the info reported from the National Association of Realtors yesterday:

 

  • Year over year existing home sales declined by 2.3% year over year
  • Existing home sale prices increased by just over 4% year over year

 

If it sounds different than what most of the national media has been reporting…  It is.  Commonly the national media will talk about month to month numbers.  In real-estate, as with most economic indicators, the important information is year over year data to adjust for seasonal factors.  When you look at the data appropriately June was the weakest month year over year in the housing market since the recovery began 2.5 years ago.  We need to carefully watch real-estate through the summer to see what’s next.  If we see a decline in sales and prices simultaneously I’ll become concerned about the economy at large. 

 

Audio Report:

 

 

 

First auto insurance & now wireless...  Get tracked and get stuff...  For now:

 

Bottom Line:  So you’re probability familiar with some of the auto insurance companies that will offer you perks and discounts if you accept a device in you car that tracks and reports to the insurance company everything that happens with your car.  Well now it’s here for mobile. 

Verizon calls it:  The “Smart Rewards” program as part of Verizon Select

 

Sounds great right?  Well here’s the deal.  If you agree to let Verizon track everything you do on mobile devices on their network, they’ll provide you with “perks like discounts for shopping, travel, and dining”.  Naturally if you agree the information will be used by Verizon for marketing purposes.  Little too intrusive if you ask me.  All of these programs are a bit like a voluntary version of the Truman Show. 

 

Audio Report:  

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